Finance Latvia Association appreciated the opportunity to share the proposals for further strengthening of EU wide AML/CFT framework with the European Parliament TAX3 Committee

On August 30 Finance Latvia Association had a meeting and meaningful discussion with delegation of the Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) of the European Parliament.

At the meeting, the current situation in the banking sector was broadly discussed, including latest statistics. Finance Latvia Association shared the details of the far-reaching derisking that continued in the Latvian financial sector in the first half of 2018 leading to EU deposits now accounting for close to 90 % of the total deposits; as reported by The Financial and Capital Market Commission - the excessive risks associated with servicing most shell companies have been fully recognized and the high-risk customer segment has been exited.

Association as the representative of Latvia's banking sector, confirmed zero tolerance for the use of Latvia's banking system for illicit activities and affirmed that Latvian banking industry is committed to complying with applicable Latvian AML/CFT and sanctions requirements as well as those of the European Union, the United Nations, and the United States. It was emphasized that in October 2017, the Council of the Association approved Policy Guidance and Guidelines on Anti-Money Laundering, Countering Terrorism Financing and Enforcement of Sanctions. By approving these guidelines, the Council clearly articulated the goal of achieving the highest anti-money laundering and combating the financing of terrorism (AML/CFT) compliance standards among member banks within the next 2 to 3 years.

To the head of delegation, Petr Ježek Association expressed true welcoming of the establishment by prime minister Māris Kučinskis of the International Advisory group for change management and coordinated communication within the Latvian financial sector. We believe that in order to continue working efficiently with the US and other international partners it is important to maintain regular and coordinated dialogue between all parties involved, thus ensuring coherent communication of the full range of the Latvian government’s planned actions. A regular work by the International Advisory Group, chaired by the Prime Minister, is important for this comprehensive task.

Within the meeting Finance Latvia Association presented proposals for further strengthening of EU wide AML/CFT framework:

1. Adopt EU AML Regulation to replace the AMLDs, to ensure uniform rules across the EU without the differences inherent in transposing the directives into the national legislation.

2. Oblige the National Commercial and/or Company Registration authorities to verify the true identity of UBOs at registration and upon any changes, therefore preventing use of EU registered companies in multilayered structures for illicit purposes. Full public access to UBO information should be mandatory.

3. Set-up an EU FIU with uniform suspicious activity reporting requirements and information access rights across the EU and across the obliged AML entities.

4. Adopt EU wide and meaningful set of criteria to restrict the service provision by financial intermediaries to the shell companies. The specific approach taken by the Latvian authorities on this issue is explained in the documents provided.